The decline in the trading volume of unsecured transactions following the financial crisis led to a loss in EONIA’s representativeness. Moreover, the manipulation of some of the main benchmark rates, such as LIBOR, and the sanctions imposed by the authorities, resulted in a large number of institutions stopping their voluntary contributions to these and other benchmarks, such as EONIA. In this situation, the need for appropriate and reliable benchmark rates became clear. This article describes the key features of the new euro risk-free interest rate, known as the euro short-term rate (€STR), and why it was created. In addition, the article gives an account of the progress made by the working group on euro risk-free rates and the transition required to gradually replace EONIA, which has until now served as the benchmark for many money market contracts and as an indicator for monetary policy decisions in the Eurosystem.
Artículo de revista
Financial Stability Review. Nº 38 (Spring 2020), p. 123-145